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Arkansas banks reducing nonperforming loans

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LITTLE ROCK, Ark. (AP) — Banks in Arkansas are doing a better job reducing the number of nonperforming loans than banks in neighboring states, an official with the Federal Reserve Bank of St. Louis says.

Of the state's 118 banks, nonperforming loans totaled $770 million in the first quarter this year, down about 25 percent from the first quarter last year, according to a story published Sunday in the Arkansas Democrat-Gazette (http://bit.ly/1i1FTOv ). The banks' nonperforming loans calculated as a percentage of total loans was 1.77 percent in the first quarter, down from 2.39 percent in the first quarter last year. Nonperforming loans are ones that are more than 90 days past due.

"Generally Arkansas banks recovered relatively quickly from some of the real estate issues, so its nonperforming loan levels are pretty decent right now," said Julie Stackhouse, senior vice president with the St. Louis bank.

Arkansas State Bank Department commissioner Candace Franks said banks in the state have done relatively well since the recession because bankers are generally financially conservative.

"Arkansas bankers know their customers and are generally focused on their communities," Franks said.

But the number of banks in the state continues to shrink. There were 205 banks based in Arkansas in March 2000. Now that number is 118, which is a 42 percent decline, according to the Federal Deposit Insurance Corporation.

Nine more banks are expected to disappear later this year.

"I think we'll continue to see a lot of consolidation," Franks said. "Whether the perception is correct or not, I think some bankers feel like achieving a certain size is better for their institution, so they look for merger partners.

"The real crux of (the decline) is mergers and acquisitions," she said. "We've always had quite a few mergers and acquisitions prior to the (recession) but some of that was buffered by the fact that when you lost a (bank) there was often a new (bank) that served to offset some of the decline in headquartered offices."

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Information from: Arkansas Democrat-Gazette, http://www.arkansasonline.com

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